State Approves PSE&G’s $500 Million Solar-Energy Initiative

A nearly half-billion dollar program to promote new solar projects proposed by Public Service Electric & Gas won approval yesterday from state regulators, with officials saying the projects would have little impact on utility customers’ electric bills.

But the New Jersey Division of Rate Counsel and lobbyists for business interests questioned whether ratepayers could afford the added costs, given other expensive proposals pending before the state Board of Public Utilities.

BPU Commissioner Jeanne Fox, a staunch supporter of solar energy in the past, agreed with the critics. In voting against one part of the proposal, she noted that PSE&G also has a proposal pending before the agency to invest $3.9 billion to harden its power grid to withstand extreme weather, such as Hurricane Sandy, a measure the BPU has to carefully consider.

“But for that, I would be in favor of this,’’ Fox said, casting a rare dissenting vote against her fellow commissioners.

However, Fox supported the other component of the PSE&G proposal, which involves extending a solar-energy loan program to residents, small businesses, and commercial customers and industrial users. The program, dubbed Solar Loan III, would involve development of 97.5 megawatts of new solar capacity at a cost of $193 million, which would be financed by ratepayers.

The other program, known as Solar4All, calls for spending $247 million on developing grid supply, building primarily on landfills and brownfields. All but three megawatts of the 45 megawatts generated would be on those vacant properties. The balance would come from grid facilities on parking lots, from improving power-grid security, and grid facilities on government facilities.

The PSE&G proposal is a much smaller version of a plan filed with the BPU last August. The proposal called for spending $883 million over five years for solar installations. The plan generated much controversy, mostly from business interests increasingly upset about the costs of subsidizing solar to promote the state’s aggressive renewable-energy goals.

On the other hand, environmental groups, lawmakers and others believe the state is still not doing enough to promote solar, saying it offers New Jersey a cleaner way to produce electricity and would be more reliable in the aftermath of extreme weather, such as Hurricane Sandy.

Part of the PSE&G revised plan reflects a top priority of initiatives developed by both the Christie administration and the Legislature, which aim to steer larger so-called grid-supply projects to landfills and brownfields, rather than open spaces such as farmland.

BPU President Bob Hanna said the grid-supply projects are the least expensive way to develop new solar installations, which he acknowledged are more expensive than other ways of producing electricity, particularly new natural gas-fired plants.

BPU staff said the projects would not have much impact on the average residential customers’ bills. For the grid supply component, the most any customer would pay in any one year in added utility costs would be $4.50 a year. For the solar energy loan program, residents’ bills would rise, by most, $2.12 annually, according to BPU staff member Rachel Boylan.

Business lobbyists argued costs for their customers would be much higher.

Hal Bozarth, executive director of the Chemistry Industry Council, whose members use huge amounts of electricity, said his organization’s calculations suggest the cost to large energy users could amount to $51,000 a year under the program.

“All this for energy that is 40 to 60 percent more expensive than what we have now,’’ said Bozarth, one of the state’s most persistent critics of PSE&G. “For us, it’s a lose-lose proposition.’’

Division of Rate Counsel Stefanie Brand, who opposed the settlement, agreed with Fox about having to consider ratepayer impacts in the context of all proposals that could spike energy bills.

“You can’t look at every proposal by itself,’’ said Brand, citing PSE&G’s initiative to spend nearly $4 billion to harden the power grid; efforts by utilities to recover storm restoration costs, including more than $600 million sought by Jersey Central Power & Light; and increased costs to provide needed capacity to keep lights on, particularly in PSE&G’s territory, costs which spiked in an auction conducted last week.

“That’s why we think this program doesn’t make sense,’’ she said.

In a relatively small way, another action taken yesterday by the agency reinforced that view.

The BPU approved yesterday an adjustment in PSE&G’s utility rates for a program to reduce greenhouse gas emissions, raising electric bills for residential customers by $11.45 a year and costs to the same gas customers by $2.18 annually. In addition, the agency also approved adjustments in its initial solar-energy loan program that will boost residential customers’ electric bills by $3.16 a year.

Those costs, while incremental, reflect a gradual increase in bills resulting from a variety of factors—increased rates to upgrade the transmission lines from power plants to utility substations; accelerated investments in utility infrastructure upgrades to spur new jobs; and higher costs to comply with the state’s efforts to increase the amount of electricity produced from renewable energy.

But some in the solar energy industry backed the new solar program.

“Today’s decision by the BPU will certainly help New Jersey reach the goals that Governor (Chris) Christie laid out in his Energy Master Plan,’’ said Katie Bolcar Rever, director for Mid-Atlantic States at the Solar Energy Industries Association. “We have a great deal of confidence in the future of the New Jersey solar industry, and the extension of the Solar Loan III program and ‘right-sizing of the Solar4All Extension adds to that confidence.’’